Shipbuilder goes ahead with its plan despite union’s protest
Despite all-out opposition from its workers, shareholders of Hyundai Heavy Industries (HHI) approved the first step necessary to merge with Daewoo Shipbuilding & Marine Engineering (DSME) on May 31.
Just higher than 72 percent of HHI shareholders took part in the meeting, which was delayed due to the fierce protest of unionists, and 99.9 percent of them voted in favor of a split-up plan of the world’s largest shipbuilder.
In line with the decision, the HHI group will be divided into two outfits of an intermediate holding company and a business firm.
The new holding firm will acquire DSME so that it will have four affiliates of the new business firm, Hyundai Samho Heavy Industries and Hyundai Mipo Dockyard on top of DSME.
Earlier this year, HHI signed a $1.7 billion deal with the Korea Development Bank to buy DSME. The state-run lender is the largest shareholder of cash-strapped DSME with a 55.7-percent stake.
The consolidation between the world’s two leading shipyards would give birth to a mega-sized player with a 21.2-percent market share of the global order book.
However, the merger has faced strong opposition of employees at both HHI and DSME, who worry about worsening working conditions and job security.
Hit by a slump in the shipbuilding industry, the two companies have dismissed some 30,000 workers over the past four years and their employees are concerned that the tie-up will make things worse.
Against this backdrop, HHI union members staged sit-in strikes at the shipyard’s head office in Ulsan this week. This prompted the company to hold the shareholder’s meeting with heavy police protection in place.
The M&A also has to go through anti-monopoly reviews both at home and abroad. In particular, HHI should get the green light from China, Japan, the United States, and the European Union, which purchase many vessels from HHI and DSME.
China and the European Union are widely expected to raise concerns about possible market monopoly. For instance, the two firms combine to account for more than 80 percent of the market in LNG carriers.